Our earlier report for H1 2006 found that despite the tempting ‘free’ broadband services now offered by several ISPs, broadband take-up was slow in the first half of 2006. This was by no means due to lack of consumer interest, but mainly a lack of technical availability. Delay in Local-Loop-Unbundling have caused major delays for thousands of broadband customers wanting to get a free service.

With customer complaints persisting the second half of 2006 has not started any better, but there are also signs of a gradual recovery in Broadband Britain. LLU made good progress in Q3 2006, up from 580,000 to 850,000 (no, not a typo). This represents a quarterly net addition of 270,000 unbundled lines, compared to 220,000 in Q2 2006. Together with Kingston Communication’s contingent of DSL lines in and around the city of Hull, we estimate that the number of DSL lines in the UK now totals 9.4 million, up from 8.7 million in Q2 2006. All in all, the UK’s DSL base grew by 8% this quarter, compared to 6.5% last quarter.

BT’s DSL figures for Q3 2006 show that the progress in LLU has a considerable effect on BT’s wholesale business. Slowly, but steadily LLU is beginning to erode BT’s dominance in some areas of the UK. London and Greater Manchester are the two regions in which BT’s share of DSL lines drop by 1.7% and 3.6% respectively in Q3 2006.

The South East has with 17% the highest share of BT DSL lines, followed by London, the East of England and the North West with about 10 to 11%.

Overall, some UK regions disappointed, some excelled. Northern Ireland has the highest DSL growth rate between Q4 2005 and Q3 2006, followed by Wales and Scotland. Staring out with low or just about average subscriber numbers in Q4 2005, these three regions have clearly made an effort to close the gap. But as Figure 2 highlights, the North East, West Midlands and North West performed weakly. With take-up ranging between 19.6% and 22.8% in Q4 2005, we would have expected them to grow somewhat faster than they did.

In particular, the populous North West has - with 18.3% one of the lowest growth rates in the entire set. Only London scored lower; a region in which BT is losing market share to LLU ISPs. The South East beats them all. Despite its size and the highest broadband take-up in Q4 2005, growth has continued an impressive scale of 21.4% since Q4 2005. But Q3 2006 also reveals the end to it. With the second lowest growth rate of 4.5% in this quarter, saturation and the LLU effect are beginning to take its toll on BT DSL lines in the South East.